Details of the Schedule
2.Paragraph 1 provides that Capital Allowances Act 2001 (CAA 2001) is amended by Part 1 of the Schedule.
3.Paragraph 2 inserts new sections 165A to 165E into CAA 2001.
4.Subsection (1) of section 165A provides that plant and machinery allowances are restricted under section 165B(1) if a connected person (S) provides a service to a person (R) who is carrying on or has ceased to carry on a ring fence trade and all or part of the consideration for the service is decommissioning expenditure.
5.Subsection (2) of section 165A provides more detail for the purposes of subsection (1)(b).
6.Subsection (3) of section 165A applies subsections (4) to (9) for the purposes of sections 165A to 165E.
7.Subsection (4) of section 165A provides more detail about what is included within ‘providing a service’.
8.Subsection (5) of section 165A defines ‘decommissioning expenditure’.
9.Subsection (6) of section 165A defines ‘decommissioning’.
10.Subsections (7) and (8) of section 165A provide further detail for the purposes of subsection (6).
11.Subsection (9) of section 165A provides the meaning of ‘R’s expenditure under the arrangement’.
12.Subsection (1) of section 165B provides that the amount if any by which R’s expenditure under the arrangement exceeds D is to be left out of account in determining R’s available qualifying expenditure.
13.Subsection (2) of section 165B provides the amount of D.
14.Subsection (3) of section 165B provides that subsection (2) is subject to sections 165C and 165D, which provide for D to be calculated differently in certain circumstances.
15.Subsection (4) of section 165B provides the amount of D if a service is provided by more than one connected person.
16.Subsection (1) of section 165C provides that section 165C applies to so much of R’s expenditure as relates to the supply by S of a service if the service is a planning or project management service, and the cost plus method is an appropriate method of applying the arm’s length principle to the provision of it.
17.Subsection (2) of section 165C provides that D is the sum of the cost to S of providing the service or the part of the service, and the appropriate percentage of that amount.
18.Subsection (3) of section 165C provides the meaning of ‘the appropriate percentage’.
19.Subsection (4) of section 165C provides that any expression used in section 165C and in the transfer pricing guidelines (as defined by section 164(4) TIOPA 2010) takes its meaning from those guidelines.
20.Subsection (1) of section 165D provides that section 165D applies where S decommissions the plant or machinery, there are one or more other participators in the relevant field and the decommissioning expenditure is apportioned between the participators in accordance with their shares in the oil won from the relevant field or their shares in the equity of that field.
21.Subsection (2) of section 165D provides the amount of D.
22.Subsection (3) of section 165D provides that where plant or machinery is or has been used in connection with winning oil from more than one relevant field, and the decommissioning expenditure is apportioned between those fields in accordance with the contribution from each field to the total of the oil won using that plant or machinery, subsections (1) and (2) apply to each such field as if subsection (1)(c) referred to the expenditure apportioned to that field.
23.Subsection (4) of section 165D provides that subsections (2) and (3) do not apply, and section 165B(2) applies instead, if the amount of consideration or the method of determining that amount to be received by S, or the apportionment of the liability for that consideration between the participators or the fields, is part of an avoidance scheme.
24.Subsection (5) of section 165D provides the meaning of ‘avoidance scheme’.
25.Subsection (6) of section 165D provides more detail on the meaning of ‘obtaining a tax advantage’.
26.Subsection (7) of section 165D provides that ‘licensee’, ‘oil’ and ‘oil field’ take their meaning from Part 1 of OTA 1975 and provides a definition of ‘other participator’ and ‘relevant field’.
27.Subsection (1) of section 165E provides that allowances under Part 2 CAA 2001 are restricted under subsection (5) if a person (R) who is carrying on or has ceased to carry on a ring fence trade enters into a transaction with another person (S) who receives from R consideration for services provided, all or part of that consideration is decommissioning expenditure and the transaction has, or is part of or occurs as a result of a scheme or arrangement that has, an avoidance purpose.
28.Subsection (2) of section 165E provides further detail as to the circumstances in which subsection (1) may be satisfied.
29.Subsection (3) of section 165E provides the circumstances in which a transaction, scheme or arrangement has an ‘avoidance purpose’.
30.Subsection (4) of section 165E provides more detail on the meaning of ‘obtaining a tax advantage’.
31.Subsection (5) of section 165E provides that all or part of R’s expenditure is to be left out of account in determining R’s available qualifying expenditure.
32.Subsection (6) of section 165E provides that the amount of expenditure to be left out of account is such amount as would or would in effect cancel out the tax advantage.
33.Paragraphs 3 to 7 provide consequential amendments to CAA 2001.
34.Paragraph 8 provides that the amendments made by Part 1 have effect in relation to expenditure incurred on decommissioning carried out on or after Royal Assent to Finance Act 2013.
35.Paragraph 9 inserts new sections 416ZC, 416ZD and 416ZE into CAA 2001.
36.Subsection (1) of section 416ZC provides that the amount of expenditure which is qualifying expenditure is restricted under section 416ZD(1) where a connected person (S) provides a service in connection with work on the restoration of a relevant site to a person (R) who is carrying on or has ceased to carry on a ring fence trade and all or part of the consideration for the service would be qualifying expenditure of R under section 416ZA.
37.Subsection (2) of section 416ZC provides more detail for the purposes of subsection (1)(b).
38.Subsection (3) of section 416ZC provides that subsections (4) and (5) apply for the purposes of sections 416ZC, 416ZD and 416ZE.
39.Subsection (4) of section 416ZC provides that ‘relevant site’ has the meaning given by section 416ZA(8).
40.Subsection (5) of section 416ZC provides more detail about what is included within ‘providing a service’.
41.Subsection (1) of section 416ZD provides that the amount if any by which the consideration for the service exceeds D is to be left out of account in determining the qualifying expenditure.
42.Subsection (2) of section 416ZD provides the amount of D.
43.Subsection (3) of section 416ZD provides that subsection (2) is subject to subsection (4) and section 416ZE which provide for D to be calculated differently in certain circumstances.
44.Subsection (4) of section 416ZD provides that section 165C and section 165E (subject to the modifications in subsection (5)) apply to an amount restricted under subsection (1) as they apply to an amount restricted under section 165B(1).
45.Subsection (5) of section 416ZD provides the modifications to which section 165E is to be subject.
46.Subsection (6) of section 416ZD provides the amount of D if a service is provided by more than one connected person.
47.Subsection (1) of section 416ZE provides that section 416ZE applies where S carries out the restoration of a relevant site, there are one or more other participators in the relevant field and the expenditure incurred in carrying out the restoration is apportioned between the participators in accordance with their shares in the oil won from the relevant field or their shares in the equity of that field.
48.Subsection (2) of section 416ZE provides the amount of D.
49.Subsection (3) of section 416ZE provides that in some circumstances subsections (1) and (2) apply to each such field as if subsection (1)(c) referred to the expenditure apportioned to that field.
50.Subsection (4) of section 416ZE provides that subsections (2) and (3) do not apply, and section 416ZD(2) applies instead, if the amount of consideration or the method of determining that amount to be received by S, or the apportionment of the liability for that consideration between the participators or the fields, is part of an avoidance scheme.
51.Subsection (5) of section 416ZE provides the meaning of ‘avoidance scheme’.
52.Subsection (6) of section 416ZE provides more detail on the meaning of ‘obtaining a tax advantage’.
53.Subsection (7) of section 416ZE provides the meaning of ‘relevant field’ in relation to the restoration of a relevant site.
54.Subsection (8) of section 416ZE provides that ‘licensee’, ‘oil’ and ‘oil field’ take their meaning from Part 1 of OTA 1975 and provides the meaning of ‘other participator’.
55.Paragraph 10 makes a consequential amendment to section 395(3) CAA 2001.
56.Paragraph 11 provides that the amendments made by Part 2 have effect in relation to expenditure incurred on restoration carried out on or after Royal Assent to Finance Act 2013.
57.Paragraph 12 provides that Part 4 of TIOPA 2010 (transfer pricing) is amended by paragraphs 13 to 15.
58.Paragraph 13 inserts paragraph (ba) into section 147(6) (list of exceptions to the basic rule stated in that section).
59.Paragraph 14 inserts new section 206A (modification of basic rule where allowances restricted for certain expenditure) into TIOPA 2010.
60.Subsection (1) of section 206A provides that section 206A applies where in a case to which section 165A(1) of CAA 2001 applies R’s available qualifying expenditure is restricted under section 165B(2) or section 165C of CAA 2001, or in a case to which section 416ZC(1) of CAA 2001 applies R’s qualifying expenditure is restricted under section 416ZD(2) or section 165C.
61.Subsection (2) of section 206A provides the amount which S is required to bring into account in calculating for tax purposes its profits and losses in relation to the service provided to R.
62.Subsection (3) of section 206A provides that section 147(3) and (5) do not apply to the extent they are inconsistent with subsection (2).
63.Subsection (4) of section 206A provides that in section 206A ‘R’ and ‘S’ have the meaning given by section 165A or 416ZC of CAA 2001.
64.Paragraph 15 inserts new subsection (3) into section 213 TIOPA 2010.
65.Subsection (3) of section 213 TIOPA 2010 provides that a claim under section 174 may not be made if the claim would affect the operation of sections 165A to 165E or 416ZC to 416ZE of CAA 2001.
66.Paragraph 16 provides that the amendments made by Part 3 have effect for accounting periods ending on or after Royal Assent to Finance Act 2013.
